There are many apps that offer microinvesting services, but they all operate in a unique way. However, there are primarily two ways that they work. Some of the apps permit fractional investing, which is the purchase of a portion of an equity.
Fractional investment is prohibited on the stock market, but the apps buy a complete share and split it up for its users. People who cannot afford an entire share can purchase fractional shares with the money they have saved.
Other apps demand that the user link their debit card or bank account. The programme then rounds up each purchase to the next integer higher and transfers the leftover money to the user’s investing fund.
For illustration, suppose Person A connected their debit card to a micro investing apps. They purchase $2.50 worth of coffee at a cafe each morning. $3 is debited from their bank account each time their card is used to swipe the machine. In their investing fund, the remaining 50 cents are automatically placed. The sum is really small.
Benefits of Micro-Investing Platforms
Traditional investing platforms, such as fixed deposit schemes or stock markets, place restrictions on their customers, such as establishing a minimum deposit amount or requiring recurring contributions of predetermined amounts of money. But not everyone has the financial means to do so.
People with irregular or low incomes who can’t save $100 at a time require a convenient alternative method of saving. Users can increase their savings without worrying about raising huge sums of money thanks to microinvesting sites. It provides consumers with the following advantages:
Inculcating a saving habit
It’s not a big expense to set aside a few dollars every other day or to allow a few more cents to be taken out of one’s bank account. On the other hand, it can mount up to a sizable sum over time. People who practise it form a lifelong saving habit without feeling forced to be frugal.
Convenience
With just the touch of a button, money can be saved. No lengthy procedures related to conventional platforms, such as filling out lengthy forms or opening Demat accounts, are necessary.
